Stiff Armed

There is a long running argument about whether local officials need greater control of federal education funding to better align spending with student needs. The issue of funding flexibility in No Child Left Behind (NCLB) ignited intense Congressional debate during the law's passage in 2001 and has re-emerged with reauthorization on the horizon. Fifty-seven House Republicans, eager to diminish the federal role in education, this March sponsored a bill to give states almost total control over federal education funds and shift accountability to the state level. But new data from the U.S. Department of Education show that five years after the enactment of increased flexibility under NCLB, few districts are using their ability to reallocate federal funds, in sharp contrast to lawmaker expectations.

Like previous federal education laws, NCLB provides money to local schools through a number of categorical programs, or "titles," each of which focuses on a different education goal. Title I, for example, benefits poor students, and Title II promotes teacher quality. In the absence of flexibility programs, this money must be used for its federally established purpose.

When NCLB was originally debated in Congress, many Republican legislators wanted to remove the barriers between various programs. A key theme of the law was "accountability in exchange for flexibility"—providing state and local officials with more discretion in using federal money while requiring greater responsibility for student achievement. Rep. Pete Hoekstra (R-Mich.) and other Republicans wanted to see "local education officials, those who know the names of their students" spend funds the way they felt was most effective, "not the way a bureaucrat in Washington tells them to."¹

Some Democrats, on the other hand, were loath to give state and local educators a free hand to spend federal funds that lawmakers in the past had targeted to address specific problems in the education system. The standoff led to a compromise and the creation of several "flex" plans: "Local-Flex," for local school districts; "State-Flex," for state education agencies; and "Transferability," which has the broadest eligibility requirements and is open to both states and districts. A fourth flexibility initiative, "REAP-Flex," permits small rural districts to combine the often-modest amounts of federal categorical education aid that their small enrollments entitle them to.

The legislative compromise on flexibility set caps on the number of states and districts permitted to take part in the local and state flex plans. But in retrospect, the cap compromise was unnecessary. As Table 1 shows, Local-Flex and State-Flex yielded only one participant in both programs combined. Only eight states and 16 percent of districts are using Transferability, despite its near-universal eligibility criteria. The only new program with considerable participation has been the rural REAP-Flex initiative.

In some ways, the tepid response to the flexibility provisions isn't surprising. A lack of enthusiasm at the local level for flexibility preceded the No Child Left Behind Act. A 1994 program, "Ed-Flex," provided states with the authority to waive certain federal program regulations in order to innovate and better meet student needs. While initial state interest in a pilot-program was high, only 10 states chose to participate after it was expanded nationwide. The program's impact was limited—most states implemented only minor changes and not infrequently sought permission for activities that were already allowed under existing law.

Nonetheless, the political pressure for local control remained strong and resurfaced eight years later in NCLB, in the form of renewed demands for funding flexibility. And some policy analysts thought that NCLB's more demanding accountability requirements would spur greater interest in funding flexibility than had existed in Ed-Flex, as states and school systems sought innovative ways to meet NCLB's standards.

But that hasn't been the case.

In 2005, the U.S. Department of Education commissioned the Urban Institute to survey districts to find out why the new NCLB flexibility provisions are—and are not—being used. The study's information on the Transferability program is the most valuable because enough states and districts have used the program to draw reasonable conclusions and identify trends, despite low participation rates in the program. Thirty-five percent of districts that didn't use Transferability said the amount of money eligible to transfer was insufficient to make an impact, while 44 percent said they already had enough funding flexibility prior to NCLB. Nearly half the non-participating districts said they lacked information or were confused about how the flexibility programs work.

The survey also documented how the flexibility provisions have been utilized by the small minority of districts that chose to participate in the Transferability program. As Table 2 shows, districts clearly prefer some programs over others. Over 20 percent of the funding originally intended to support teacher quality and safe and drug-free schools was redirected into programs for poor students, technology, and—most frequently—innovative programs. Perhaps not coincidentally, the innovative programs part of the law gives districts the widest latitude in use of funds.

The steady pattern of transferring out funds allocated for teacher quality and safe and drug-free schools suggests that these districts either have sufficient existing resources dedicated to these areas, or they feel funds can be better spent on other programs.

Flexibility provides districts with a way to reallocate money to programs they feel are important and out of areas that don't align with their needs, but low participation rates limit the program's impact.

Several factors may contribute to the low participation rates. First, federal funding often constitutes only a small percentage of local budgets, especially in more affluent communities. In addition, because of concerns about equity for low-income youngsters, flexibility provisions currently wall-off programs with the most funding, especially the Title I compensatory education program. Other large categorical programs such as vocational education and special education also are not included in the flexibility programs for the same reason. Finally, many states and districts appear more interested in modifications to NCLB's accountability and teacher quality provisions than to the federal funding streams. None of the NCLB flexibility programs permit states or school systems to sidestep the law's accountability requirements.

In order to increase local use of flexibility, programs would seemingly need to allow districts to shift more money and do a better job of informing states and districts about the various flexibility options.

Yet the substantial percentage of districts that reported no need for more flexibility indicates that even with improved communication and more authority to transfer funds, many districts simply don't see, or are unable to use, federal funding flexibility as an important policy tool in meeting accountability standards.

The fact that few districts are eager to participate in NCLB flexibility programs suggests that such programs are likely to have only modest impact, at best, absent changes in the program. In contrast to the hopes of lawmakers in crafting the accountability-for-flexibility bargain, local flexibility has done little to alter local spending, encourage innovation, or catalyze significant new efforts to improve student achievement.

Margery Yeager is a former Department of Education employee. She served as the Contracting Officer's Representative on the contract that produced the report "Evaluation of Flexibility Under No Child Left Behind."

Endnote
¹ U.S. House, Congressional Record. 107_^th Cong., 1_^st sess., May 23, 2001: H2578.

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